Beginning in 2026, the SECURE 2.0 Act requires employees age 50 or older who earned more than $150,000 in FICA wages from their employer in the prior year to make any eligible 401(k) catch-up contributions on a Roth (after-tax) basis. This means catch-up contributions will no longer reduce current taxable income, but qualified withdrawals in retirement can be tax-free. Employees who do not meet the wage threshold may continue making catch-up contributions on either a pre-tax or Roth basis, depending on their plan’s available options.
What is a 401k catch-up contribution? A catch-up contribution is an additional contribution opportunity available to employees age 50 and older, allowing them to save more for retirement beyond the regular 401(k) contribution limit. Catch-up contributions are designed to help individuals boost their retirement savings as they approach retirement age and take advantage of tax-advantaged retirement savings opportunities.
If you have any questions about this benefit, please contact us.